Economists polled by Reuters had widely expected sales growth to slow from September's pace as consumer confidence sank under the weight of the housing slide, rising oil prices and tightening credit terms.

Investors are watching retail sales data particularly closely for signs that consumers are caving, which would deal a severe blow to the already shaky U.S. economy. Consumer spending accounts for more than two-thirds of U.S. economic activity.

Last week, major retailers posted disappointing October sales, which they blamed on the economic woes plus unseasonably warm weather that hurt demand for fall clothing.

The Commerce report showed a similar trend, with department store sales down 0.5 percent and clothing and accessory stores up a modest 0.1 percent.